This past week, France passed a three per cent tax that will apply to about 30 tech giants including the FAANGs, as well as Chinese firms and at least one French company, Criteo. It was a bold measure that flew in the face of a defiant United States, which ordered an investigation into whether the levy restricts U.S. commerce.
While at first glance, the measure would seem like another reactionary turn against Big Tech, it’s actually part of a larger geopolitical shift pitting Europe against the United States and China, with the techlash simply serving as a proxy. Tech policy is now foreign policy.
In China, you have an actor that views tech platforms as part of the state. Giants like Alibaba (China’s Amazon) and Tencent (owner of the popular messaging platform, WeChat) are both required to help the Chinese government hunt down criminal suspects and silence political dissent.
In the United States, you have an actor that has generally seen tech platforms as part of the free-market economy, and whose doctrine has been limited regulation, libertarian values and a belief in market forces. President Donald Trump has called for some tech giants to be broken up, but when it matters—for example, the €400-million tax from France—he comes to their defence.
And, in Europe, you have actors that believe in citizens’ right to privacy and control of their own data. Last year’s General Data Protection Regulation (GDPR) was a prime example of that commitment.
As a result of their own respective histories, all three of these tectonic forces are reshaping the internet and digital technology.
Canada has largely attempted to remain a neutral player in this global shift, preferring to continue trading with China, invite foreign direct investment from the United States and align ideologically with Europe on user privacy.
As late as the fall of 2017, Canada was cozying up to Facebook. Sidewalk Labs was endorsed by the prime minister himself. And, Huawei researchers continued their groundbreaking research silently in Canadian universities.
But a slew of seemingly disparate events has forced Canada’s hand.
First, it was revealed that foreign actors spread misinformation on Facebook in an attempt to influence 2016’s U.S. presidential election and the U.K.’s Brexit results. The findings shattered the notion that what happens online stays online.
Then, documents were released showing Canada’s connection to Cambridge Analytica through the tech firm AggregateIQ. And, interest grew in the Alphabet-led Sidewalk Labs smart-city project on Toronto’s waterfront. These events not only heightened citizen awareness about data and privacy, but became focal points for the debate on how intellectual property can generate revenue in the intangible economy.
And, finally, Huawei executive Meng Wanzhou was arrested on Dec. 1, 2018. Canada’s top telecoms, Bell and Telus, have built their 4G and 5G infrastructure on top of Huawei technology, and the move thrust them in the middle of a hegemonic battle between two world superpowers.
These events—and the country’s reaction to them—provide a sense of the delicate balance Canadian officials have to tread between supporting the foreign investment delivered by these global tech giants and wrist-slapping them for their transgressions.
If you thought negotiating the USMCA was tough, imagine what it’s like trying to please the United States, China and Europe at the same time.
But you can’t have it all, and ultimately, Canada will have to choose which horse it wants to hitch its cart to.
What officials decide will have a lasting legacy on the future of Canada’s innovation economy for decades to come.